Saturday, April 25, 2009

Denial of Class Certification to No-Fault DME Provider Upheld

Plaintiff no-fault DME provider brought this class action against Allstate for paying less that 150% of plaintiff's "documented costs" for durable medical equipment and supplies. Plaintiff moved pursuant to CPLR §§ 901 and 902 for an order allowing the action to proceed as a class.

The five prerequisites for a class action under CPLR § 901(a) are:

the class is so numerous that joinder of all members, whether otherwise required or permitted, is impracticable;

there are questions of law or fact common to the class which predominate over any questions affecting only individual members;

the claims or defenses of the representative parties are typical of the claims or defenses of the class;

the representative parties will fairly and adequately protect the interests of the class; and

a class action is superior to other available methods for the fair and efficient adjudication of the controversy.

In deciding whether an action may proceed as a class in New York state court, a court must also consider the five factors of CPLR § 902:

the interest of members of the class in individually controlling the prosecution or defense of separate actions;

the impracticability or inefficiency of prosecuting or defending separate actions;

the extent and nature of any litigation concerning the controversy already commenced by or against members of the class;

the desirability or undesirability of concentrating the litigation of the claim in the particular forum; and

the difficulties likely to be encountered in the management of a class action.

Nassau Supreme denied plaintiff's motion for certifcation of the class, and plaintiff appealed.

The Second Department MODIFIED the order by adding the words "without prejudice to renewal of the motion", holding:

In Globe Surgical Supply v GEICO Ins. Co., 59 AD3d 129 (2nd Dept. 2008), the Second Department addressed "whether it is appropriate to certify a class action challenging the validity, under regulations in effect prior to October 6, 2004, of a no-fault insurer's use of the prevailing geographic rate or the reasonable and customary rate for health care services in calculating first-party benefits due to a claimant or health-care provider." In that case, the Second Department reversed class certification of Globe Surgical Supply's action without prejudice, finding that plaintiff had not satisfied the fourth prerequisite under CPLR 910, namely, that "the representative parties will fairly and adequately protect the interests of the class[.]"

In that matter, the Second Department found that Supreme Court properly rejected Jean M. Francois, the owner of Globe, as an adequate representative for the class:

Although Globe attempts to couch Francois's problems in terms of "amorphous and generalized suppositions," it is clear that Francois was charged with insurance fraud for attempting to stage accidents and thereafter bill insurance companies. While he may have only pleaded guilty to disorderly conduct, he displayed his attempt to put his interest above others by invoking his Fifth Amendment rights at his deposition, although he later withdrew his invocation of the Fifth Amendment in a subsequently-filed reply affidavit. Moreover, there was adequate evidence that Francois was engaged in recycling invoices. In addition, Francois and the class are subject to a class action counterclaim which may or may not be meritorious.[FN4] In any event, Francois's attempt to defend himself against any such counterclaim by GEICO would preoccupy him and detract from his representation of the class.

In his affidavit sworn to April 21, 2006, Christopher J. Jones, a "Detective with the NYPD's Fraudulent Accident Investigation Squad ... for the past 2½ years," stated that "[f]raud by DME suppliers against no-fault insurance companies is widespread. It has been a principal focus of our Squad's investigation . . . On or about June 1, 2005, Mr. Francois was arrested as the result of an undercover investigation in which I was involved. He was arrested for offering to pay an undercover agent to stage a phony automobile accident and refer the alleged 'victims' to a medical clinic. The specific charges were insurance fraud in the third degree and conspiracy in the fifth degree . . . Subsequently, Mr. Francois entered into a plea agreement, pleading guilty to disorderly conduct."

Two actions; neither certified as a class, due to the legal entanglements of plaintiff's owner. Will we see these actions re-sued by different representative plaintiffs? Or will plaintiff divest its owner and re-move for certification? Would that be enough to satisfy the Second Department? Or will Globe simply proceed in these separate actions as a single plaintiff in each and seek to obtain a ruling from Nassau Supreme that it was owed 150% of its alleged documented costs, rather that what GEICO and Allstate decided were reasonable and prevailing reimbursement rates for the geographic billing areas?

Welcome to Coverage Counsel, where we hope you will find timely and useful information regarding New York state and federal insurance coverage cases and issues.

Coverage Counsel is brought to you by the law firm of MURA & STORM, PLLC with a main office in Buffalo, New York. To contact us, call (716) 855-2800 or email Roy Mura, the editor of this blawg.

Broken Links

I started this blog in April 2008, so there's bound to be a few broken links among its posts. If you find a broken link, PLEASE take a moment to email me or post a comment to the post in which the broken link appears and I'll fix it. Thanks!

Subscribe to Coverage Counsel

To receive automatic email updates to Coverage Counsel once a week on Tuesdays, enter your email address and click "Subscribe Me", which will take you to another page. Once you verify your email address by clicking the link in a confirmation email that will be sent to your inbox, you will begin receiving email updates weekly IF there are any new postings. Thanks for your interest in Coverage Counsel!

RSS Feeds

(c) 2015. First, let me congratulate you on finding this disclaimer, all the way down here at the bottom of this page. You're either very thorough, or very bored. Or both.

Either way, this is where I tell you that what I post on this blog or blawg is not intended and should not be considered to be legal advice. No attorney-client relationship is formed either from your finding your way to these pages, posting comments, or receiving comments in reply. If you need or want legal advice, you're welcome to contact and retain me, especially if your question is one relating to insurance coverage. If quality and correctness are optional to you, however, just turn on a TV, open a newspaper, or take a drive along a nearby highway and jot the numbers down of lawyers who probably don't blawg but spend gobs and gobs more on advertising than I do.

Although I try my best to keep the material on these pages current, I cannot promise that all case decisions, statutes and hyperlinks will always be up-to-date. Same goes for content accuracy. I'm nearly, but not always, perfect. Please report dead links or overruled or superseded case decisions to me by clicking here.

Although comments are moderated, I take no responsibility for and do not endorse the viewpoints expressed by this blawg's commenters. The viewpoints and opinions I may myself express in this blawg from time to time are my own and do not necessarily reflect more than one-half of the official position of the law firm of Mura & Storm, PLLC. For the record, I respect all judges, named or unnamed in these posts, though not always their judicial acumen or composition. I reserve the right to revise my thinking and recant my occasional disagreement with the logic or language of a court's decision, especially if IAS matches me with any of the mildly maligned magistrates in one of my clients' litigated matters.